#OPTION TRADING FOR DUMMIES PDF HOW TO#

The actual price is $1.50 multiplied by 100, or $150. That means $1.50 is the per-share premium. These options are currently listed at $1.50.Д®ach option contract represents 100 shares of its underlying stock. Simple enough, but now we have to discuss one of the details about options that confuses many new investors. So, putting it all together, this call is a bet that Coca-ColaвЂ™s share price will exceed $50 by the expiration date on November 20, 2020. The вЂњ50вЂќ number is the strike price, and the вЂњD20вЂќ at the end indicates that this expires on the 20th day of the month. From the вЂњ20,вЂќ you know it expires in 2020, and the вЂњKвЂќ that follows means itвЂ™s a call that expires in November (see the chart below). ItвЂ™s followed by Coca-ColaвЂ™s symbol, as thatвЂ™s the underlying asset. The вЂњOвЂќ just means that this is an option. Right off the bat, you can tell this is a Coca-Cola option. LetвЂ™s take a closer look at a call option listing from the Chicago Board Options Exchange, or CBOE, BryanвЂ™s preferred formatвЂ¦ (O: KO 20K50D20).

More often than not, we simply buy the option (or set up an option strategy), watch the price of its underlying asset rise or fall, then get out before it expires. ThatвЂ™s right, we never have to own a single share of stock to make huge gains from options. ItвЂ™s a bet that the price of the underlying stock will sink below the optionвЂ™s strike price and the contracts will give their owner the ability to sell at a premium.Д«ut hereвЂ™s the trick: We rarely exercise theВ rightВ to buy or sell shares in The War Room, and when we do, itвЂ™s usually part of a larger strategy. When that happens, those calls are referred to as вЂњin the money.вЂќВ If a call optionвЂ™s strike price is above the price of its underlying security, itвЂ™s referred to as вЂњout of the money.вЂќДЄ put option is a contract that gives its holder the right вЂ“ but again, not the obligation вЂ“ to sell shares at a predetermined strike price. ItвЂ™s essentially a bet that the price of the underlying stock will rise above the optionвЂ™s strike price by expiration, and the contracts will give their owner the ability to buy at a discount. Options come in two varieties, calls and puts.Д¬all options are contracts that give their holder the right вЂ“ but not the obligation вЂ“ to buy sharesВ at a certain price. ItВ gives its holder the right вЂ“ but not the obligation вЂ“ to buy or sell 100 shares on a designated date and at a specified price called the strike price.

#OPTION TRADING FOR DUMMIES PDF HOW TO#

In this guide,В youвЂ™ll learn everything you need to know, from understanding what an options contract is to how to place a tradeвЂ¦ What Are Options? Options are a great way to leverage the market and amplify the moves of stock prices fivefold, tenfold or even more, no matter which way they move. They can move down just as quickly as they shoot up,В so you shouldnвЂ™t bet your retirementВ on a single play.Д«ut in reality, their volatility is their strength. ThatвЂ™s why they have their scary reputation. However, they are more volatile than stocks. But they offer the opportunity for bigger, faster gainsВ and the ability to put far less money at risk. What youвЂ™ll find is that options are no harder to effectively use than stocks. And youвЂ™ll be ready to dive headfirst into The War Room. By the time youвЂ™re finished reading this guide,В youвЂ™ll be well on your way to being an options trading pro. If youвЂ™re completely mystified by options and have no idea where to begin, start here. Options sound scary to many,В but theyвЂ™reВ just as easy to understand and use as stock or bondsвЂ¦Д®ven if youвЂ™ve never invested in anything in your entire life.

Option trading for dummies pdf